Philippine central bank signals further tightening to slow inflation

MANILA  -The Philippine central bank cannot rule out more interest rate hikes in 2023 as it seeks to bring inflation, running at 14-year highs, close to 3 percent in the third quarter of next year, its governor said on Tuesday.

Bangko Sentral ng Pilipinas (BSP) Governor Felipe Medalla had earlier flagged rate increases at the central bank’s first two meetings of 2023, and said on Tuesday there could be further policy tightening thereafter.

“Our goal is to have inflation between 2-4 percent, preferably closer to 3 percent by the third quarter of next year,” Medalla told reporters, adding inflation will likely peak in December after it touched 8% the previous month.

To combat inflation and maintain the interest rate gap between the Philippines and the United States, the BSP raised rates by a total 300 basis points this year, including two 75-basis points hikes in July and November.

Medalla said it is likely the central bank, which meets every six weeks, would opt for smaller rate adjustments next year.